Read more: Banks are rushing to keep up with a surge in mortgage demand, and JPMorgan was so swamped with people looking to refinance that it pulled back on marketing Some say Quicken isn't a perfect fintech comp for everyone "That's why everybody's talking about how it's going to get valued." "Once people realize, 'Oh no, we should actually be assigning a different multiple, not a tech multiple.' Then it really throws, more or less, the IPO pipeline for companies in a similar lending-focused industries," she added. But a dramatic rethink of multiples could set a precedent for other similar offerings in the space. To be sure, Lee isn't comparing Quicken Loan's business to OnDeck. However, OnDeck's stock hasn't reclaimed those highs. The company raised $200 million through its IPO in 2014 and had shares jump 38% in the first day of trading to reach a valuation of around $1.8 billion. Jennifer Lee, a principal at Edison Partners, cited small-business lending company OnDeck as an example of a fintech that has tumbled in public-markets trading after initially being valued at a tech multiple. Fintechs, which market their ability to leverage cutting-edge tech but also typically operate in some ways like a traditional financial company, fall somewhere in the middle, making them difficult to value.
The two approaches highlight the difference between evaluating a traditional financial company versus a technology one. "If they're valued based on their growth potential and out-years' earnings, then investors are willing to pay for the option value of an originations machine and management team that has a lot of room to run in a gigantic market." "If they're valued on the 'here and now' results then it's a sign that public markets investors are willing to pay for a durable business model with solid earnings," Rotman told Business Insider via email. Here's what prompted the sudden shiftįrank Rotman, a founding partner of QED Investors, said that while no single IPO should be seen as a bellwether of the general fintech ecosystem, seeing whether investors peg their valuations to current financial results or the potential market share Quicken Loans could gain in the future will be worth watching. Read more: Equity is the new debt, with Corporate America selling record amounts of stock to stockpile cash. Some fintech investors are eagerly watching to see what type of price tag public investors put on the company - and whether the valuation hems closer to "fin" or "tech." Public markets have started thawing in recent weeks with a rush of listings and filings, including an S-1 from SoftBank-backed insurtech Lemonade, which Business Insider reported had postponed plans for an IPO last year.īut a Quicken Loans IPO would be more than just a sign of the public markets coming back to life. Quicken's targeted valuation is likely in the tens of billions of dollars, according to CNBC, making it one of the biggest IPOs of 2020. On Thursday, CNBC reported that Quicken Loans, the largest residential mortgage provider in the US by volume thanks in part to its fully-digital Rocket Mortgage, has filed IPO paperwork with the SEC and could reveal S-1 documents publicly as soon as next month. Media reports that Quicken Loans is laying the groundwork for an IPO have caught fintech investors' eyes, as a public-markets debut could provide VCs a benchmark for a firm that leverages tech to streamline traditional lending. Sign up here for our Wall Street Insider newsletter.Still, Quicken Loans' scale and long corporate history may make it a difficult comp to apply widely to fintech valuations.VC investors are keeping a close eye on Quicken, saying it offers an important gauge for how investors are thinking about the intersection of tech and old-school financial services.While the valuation isn't yet set, it could be in the tens of billions of dollars. Quicken Loans has confidentially filed paperwork for an IPO, according to media reports.
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